Post on 25-Dec-2015
2008 Outlook Conference 1
Building Partnerships for a “Smarter, Uniquely Australian Innovation Process”
Paul Ford
Geoffrey Gardiner Dairy Foundation
paul.ford@gardinerfoundation.com.au
www.gardinerfoundation.com.au
2008 Outlook Conference 2
The Current View Of Dairy?
2008 Outlook Conference 3
Dairy - Farming
9.1 billion litres 2007 – 2008 - 7% drop in milk production
Western Victoria and Gippsland steady, Murray Irrigation down 15% World competitive costs of production Key $1m plus projects
Pastures CRC – Dairy Australia, Gardiner, Meat & Livestock - $1m pa Sub-surface irrigation – DPIV, Melb Uni – three projects $3.6m Robotic milking – Dairy Australia – future farms program
2008 Outlook Conference 4
Dairy - Manufacturing
140 processing sites in Victoria, around 15 process 80% of the milk flow Large sites processing 3000 to 5000 tonnes of milk per day Small very innovative plants creating high value fine foods
Key $1m plus projects Closing The Loop – water utilisation / effluent reduction - $1m Smart Drying – cutting costs / energy in producing 600k tonnes powder Dairy Health & Nutrition Consortium - $12.5m over 5 years
2008 Outlook Conference 5
Dairy – Major Markets
Markets by tonnage: Australia 395,800 Japan 137,700 Singapore 84,600 Malaysia 64,400 Indonesia 63,650 Philippines 45,600
Australian dairy exports represents 12% of world trade
A$2.5billion per annum North Asia
Rapidly aging Increasingly affluent
Demand exceeds our ability to supply
2008 Outlook Conference 6
Dairy People / Dairy Communities
100 000 people work in dairy 50 000 live in small communities of less than 10 000 people Two defining issues
Reducing workforce – dairy’s ability to attract, retain & develop Vibrancy of small dairying communities
Key Projects Cows Create Careers Health of Dairy Communities Volunteerism
2008 Outlook Conference 7
Dairy Value Chain - A$14.6bn
Value contributed:
$3.0bnExports
$7.5bnEx-factory
$4.1bnFarmgate
retail
exportmilk production
Out of home eatingDist’nmarketing
processing/manufacturing
Import
feed production
supplements
water
Resource competition Development of water markets allowing
trading of water between different user industries and irrigation systems
Greater competition for feed grains and fodder from other intensive livestock sectors
Increased competition for land, water and cattle has increased options for producers
Dairy farms• About 8000 farm enterprises, dominated
by family farm models• Low-cost production by world standards• Confidence and image threatened by
sustained drought conditions
Domestic retail markets Retailer control of supply chain increasing Growing strength of independent retail
sector Pressure from retailers for brand
consolidation alongside expansion of private label
• Consolidating but expanding food service channels
Trade position Tight supply-demand conditions in the world market
for dairy commodities with supply constraints affecting major exporters
Growing demand from emerging economies in Asia and the Middle East
Improved trade environment with less intervention to support EU and US exporters
Expanded share of global ingredients trade in the hands of fewer major traders
Emerging low-cost exporters gaining market share
Consolidating processing/marketing Fewer owners of dairy facilities through
acquisition Integration of Fonterra operations in
Australia Consolidating brand ownership Restructuring of plant configuration and
factory rationalisation has reduced plant capacity
Contraction of regional milk supplies in NSW and Queensland has meant consolidation of facilities
Dairy’s proposition to consumers
• A platform based on wellness, indulgence and convenience
9.1BL 55%
45%
Milk production • Output falling by 5-7% last 2 seasons• Decline forecast in 2007/08 due to effects of
drought on pasture growth and cost of purchased feed
• Encouraging signs of growth at farm level, offset by effect of exits, and a large % maintaining constant output
Reference: Fresh Logic Report February 2008
2008 Outlook Conference 8
Innovation?
Common Terms; innovation, R&D, new etc used interchangeably
USA, Europe and some Australian Science Providers Sequential process R&D, IP protection, commercialisation
Australian Food Manufacturer “Innovation” is a process that draws together two elements;
“R&D” Invent, create a new product, process, technology or service
“Commercialisation” Take the new product, process, technology or service through to a
commercial outcome.
2008 Outlook Conference 9
Innovation Demands Shared Strategic Focus
NOW
2015
Innovation Aligned With
Industry / Company Objectives
Priority issues for innovation projects
2008 Outlook Conference 10
Innovation - Unique Architecture
From: Christine PittMeat & Livestock Australia
Leadership & Vision
SupportiveCulture
KnowledgeManagement
Creative & Entrepreneurial
Individuals
Enterprise Innovation Capability
Innovation as part of business strategy
Integrative structures
Enabling systems & processes
Metrics
2008 Outlook Conference 11
Open Innovation
Henry Chesbrough – University of California Your organisation doesn’t have all the smart people Trusted intermediaries
Building diversity and size your personal network
Building global networks
Forming, managing and disbanding multi-disciplinary project networks on an ongoing basis
Creating uniquely Australian innovation that provides “membership” of a global network
2008 Outlook Conference 12
Innovation – The Challenges
Low Private / Public R&D Investment
Food CEO Perception – IP is difficult and expensive to access
Linkages between food companies and science providers not effective
2008 Outlook Conference 13
Low Investment In R&D
AustraliaPrivate Investment Australian food companies = 0.3% Sales International Benchmark is closer to 1% Scale is important – US / EU food companies are bigger
Public Investment Australia Agriculture Public R&D investment $US375m
International Competitors USA
John Hopkins, Madison, Cornell, Penn State all invest in excess of US$500m per annum on innovation
US Dept Ag Agricultural Research Service > US$1Bn pa EU
6th Framework R&D Funding
2008 Outlook Conference 14
Intellectual Property
IP Australia - Part of Department Of Innovation Industry Science & Research By encouraging increased innovation, investment and trade through the effective use of
IP, IP Australia is making it possible for Australian businesses to establish and maintain globally competitive positions.
Food Company Executives See Science providers as double dipping
Tax payer and farmer levies paying for fundamental science; Then asked to pay again for IP
IP Agreements seen as very complex and with huge lead times to negotiate See IP developed within a project as “owned” by the company
2008 Outlook Conference 15
Linkages No strong networks or linkages
Between science providers and food companies Links between management functions of marketing, R&D, production,
finance, process engineering
R&D and Commercialisation Processes Basically the US or European R&D model Two separate and sequential steps Food companies see:
Elegant science, not: Elegant AND relevant science
2008 Outlook Conference 16
What’s Needed? Recognition that Dairy/Food is a defining, sustainable industry
supporting the Australian economy and rural communities
We need to develop a smart “Uniquely Australian” food innovation process
Dairy/Food Innovation Centre
2008 Outlook Conference 17
Industry Recognition
Dairy
$14.6bn per annum value chain
Exports - $2.5bn
8 major companies 6500 SME suppliers
100 000 people 60 000 in small regional
communities of <10 000 people
Vehicle Manufacture
$15bn per annum value chain
Exports - $4.85bn
4 major companies 200 large component suppliers
70 000 people Concentrated Melbourne /
Adelaide
2008 Outlook Conference 18
Smarter Dairy Innovation Consolidates five dairy industry
Centre’s in one entity
Based in Werribee Food Research Precinct
Membership Eight dairy companies representing
85% Australia’s milk Dairy Australia, Gardiner
Foundation
$7m per annum Larger dairy companies investing
$900k pa membership
Structure Company limited by guarantee Industry drives Board / strategy
2008 Outlook Conference 19
Dairy Health & Nutrition Consortium
$12.5m of new investment over next 5 years $5m Gardiner Foundation - $7.5m by dairy companies
Seven Victorian dairy companies participating
Builds capability in science that underpins label claims
Capability building / Company specific projects supported by 1:2 funding
Links to Global Dairy Platform
2008 Outlook Conference 20
2008 and Beyond………..
Operating Environment:
Faster communication = global networks Central R&D laboratories are dead Innovation projects will be completed by global project teams Multi disciplined project teams will be created, managed and
disbanded on an as required basis
Limited funds for innovation investment
Australia needs smarter innovation processes Pre-competitive innovation projects have huge leverage
Evolving Federal/State Government initiatives
2008 Outlook Conference 21
Agrifood / Dairy Innovation Centre Created as part of the new Federal Government Innovation initiative
A partnership between Government, Food Companies and Science Providers
Key Components Investment in Capability
Develop smarter, uniquely Australian innovation processes Food Science Australia, CSIRO, Universities Build global networks Collate agri-food market demographics, market access
functions Innovation Grants
Demonstrate best practice innovation Build linkages between food companies and providers
2008 Outlook Conference 22
Geoffrey Gardiner Dairy Foundation
Level 1, 84 William Street
Melbourne Victoria 3152
Australia
Phone: +613 9606 1900
Website: www.gardinerfoundation.com.au